Tesco In Ground Breaking Milk Deal For Farmers

Wed, 04 Apr 2007
 
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The UK farming industry has praised Tesco after the retail giant announced it is setting up a dedicated supply chain to provide its liquid milk requirements, and guaranteeing a higher price to its suppliers.

The UK’s leading supermarket chain said yesterday it would raise the price it pays producers to 22p, a rise of 4p.

Tesco said the move would not mean consumers having to pay extra, as the company will absorb all costs, adding that this is also the best price paid to suppliers by a British supermarket.

The move was welcomed by farmers' leaders and a consumer group, and follows a campaign lasting more than 10 years to achieve a fairer profit margin for dairy farmers.

In February a group of Devon farmers handed in a 3,000-signature petition to Number 10 Downing Street demanding an inquiry into supermarket milk prices .

Around 850 farmers will be offered new and improved contracts that could boost their income by as much as £36,000 per year. The new deals will run for 12 months and be reviewed after every six months. Tesco also plans to launch "local choice milk", which is a range of milk sourced from local farms and sold at close-by Tesco stores.

The NFU (National Farmers Union) hailed Tesco’s announcement of a dedicated milk supply chain, as "the most significant and encouraging development in the dairy industry for a very long time".

Peter Kendall, president of the NFU said, "It is a ground-breaking announcement that should set a massive precedent for other retailers to now step up to the plate, not just on liquid milk but other dairy products as well."

"We shall therefore be re-doubling our efforts to create a better structure in the dairy industry to guarantee the long-term future of a vitally important sector which is still very much under threat," Mr Kendall added.

Tesco sells between 800 million and 1 billion litres of fresh milk every year.

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